Logistics properties will be coronavirus crisis winners, says Scope study
Although the mood among providers of logistics investments has clouded slightly due to the coronavirus crisis, almost three quarters of those surveyed in a new study by Scope expect rents for logistics properties to rise over the next three years.
Scope surveyed 16 providers of logistics investments to assess their current and future situation. Together, the respondents manage more than EUR380 billion in real estate and offer various investment solutions such as special AIF or real estate funds diversified across different types of use. A quarter of the respondents also offer investors logistics real estate investments via debt capital vehicles.
Although the expectations of the 16 providers remain positive for 2020 and 2021 for all segments in which they are active, their mood is subdued compared to the previous year due to the crisis. This applies in particular to providers in the project development sector.
Due to the trend towards online shopping, which has been accelerated by the crisis, logistics investments are considered to be much more robust than the retail and hotel sectors, for instance. As a result of the crisis, investors are paying more attention to the sectors in which the tenants of logistics properties are active. While online retail, food and pharmaceutical logistics are relatively crisis-resistant, the letting risks in the automotive industry including its suppliers and in mechanical engineering have increased.
Despite the coronavirus crisis, 73 per cent of those surveyed expect rental prices for logistics properties to increase in the next three years, while 27 per cent expect stagnation. The development of rents will vary depending on location and economic structure. Good locations in metropolitan areas will become more expensive, while logistics centres in rural areas will be less in demand. Regions with an industrial character and dependence on crisis-prone sectors are more likely to experience declining rents.
In the short term, however, supply rents have fallen. From the beginning of the year to June 2020, prices fell by 8.6 per cent and year-on-year by 3.4 per cent. Only the metropolitan area of Berlin, which has the least industrial character, was excluded from this development and even shows a significant increase in supply rents in June 2020 compared to the beginning of the year by 14.5 per cent. 60 per cent of those surveyed expect returns of between 4 per cent to 5 per cent.
Germany remains the most attractive logistics location for investors in the European context. A total of 56 per cent of those surveyed consider it attractive and as many as 44 per cent consider it very attractive. Germany remains by far the largest market in Europe. The geographical location, infrastructure, economic performance, high technological standards and, last but not least, the large number of inhabitants with relatively high purchasing power (who can be reached as consumers) also speak in its favour.
In addition to the logistics real estate market survey, the Scope rating agency asked the managers of open-ended real estate funds about the likely development of the shares of types of use in the portfolios in spring 2020. A total of 44 per cent of the providers of open-ended real estate funds plan to increase their purchases of logistics properties in the next three years. Only 6 per cent expect sales. By contrast, the intention to sell is predominant in the case of retail properties, with 22 per cent of those surveyed considering selling and only around 17 per cent expecting to buy.